By Ted Stricker, CFP®
Charitable giving is personal. But when structured thoughtfully, it can also be financially strategic.
At Bernath + Rosenberg, we help individuals and families integrate philanthropy into their broader tax and estate planning strategies. In 2026, donor-advised funds (DAFs) remain one of the most flexible and tax-aware tools available for charitable giving.
When coordinated properly, a DAF can help you support the causes you care about while improving tax efficiency.
What Is a Donor-Advised Fund?
A donor-advised fund is a charitable account established with a 501(c)(3) sponsoring organization.
You contribute assets (e.g., cash or appreciated securities) and generally receive a charitable deduction in the year of contribution (if you itemize). The assets may then grow tax-free inside the fund, and you recommend grants to qualified charities over time.
This structure separates the timing of the tax deduction from the timing of distributions, creating meaningful flexibility.
Key Tax Advantages in 2026
Immediate Deduction (With New AGI Floor)
In 2026, charitable deductions are subject to a 0.5% AGI floor. For example, if your AGI is $500,000, the first $2,500 of charitable giving may not be deductible. Strategic sizing and timing of DAF contributions therefore becomes increasingly important.
Tax-Free Growth
Assets inside the DAF grow tax-free, potentially increasing the amount available for future charitable grants.
Avoiding Capital Gains Tax
Contributing appreciated investments directly to a DAF can allow you to avoid capital gains taxes while still receiving a deduction based on the asset’s fair market value (subject to applicable AGI and holding-period limits).
Administrative Simplicity
The sponsoring organization manages recordkeeping and compliance, allowing you to focus on the charitable impact rather than administrative logistics.
Coordinating Giving With Estate Planning
The federal estate and gift tax exemption has increased to $15 million per person ($30 million per married couple). While fewer families may face federal estate taxes under these thresholds, charitable planning still plays an important role in legacy strategy.
Funding a donor-advised fund during your lifetime can:
- Potentially reduce your taxable estate
- Create current-year income tax benefits
- Establish a structured philanthropic legacy
- Involve the next generation in charitable decision-making
Philanthropy is most effective when aligned with your investment, retirement, and estate planning strategies, not treated separately.
Why DAFs Are Especially Effective in High-Income Years
Donor-advised funds are often particularly valuable during years of elevated income, such as:
- Sale of a business
- Large bonus compensation
- Significant capital gains
- Roth conversion strategies
In these situations, contributing appreciated assets to a DAF may help offset income while minimizing capital gains exposure. Proactive planning—before year-end—is critical to maximizing efficiency.
Hypothetical Case Study: How the Schwartz Family Used a DAF for Their Business Sale
The Schwartz family recently sold their business in 2026 for a significant profit. With their elevated income for the year, they wanted to reduce their taxable income and support their favorite causes. They set up a donor-advised fund and contributed appreciated stock, which allowed them to avoid capital gains taxes while still receiving a charitable deduction based on the full market value of the assets.
Not only did this strategy help them minimize taxes, but it also gave them the flexibility to decide how and when to distribute their charitable contributions over time. Coordinating their charitable giving with their estate plan allowed the Schwartzs to create a lasting philanthropic legacy while also managing their current-year tax liability.
A Strategic Approach to Charitable Giving
Donor-advised funds offer flexibility, tax efficiency, and administrative simplicity. When integrated into a comprehensive financial plan, they can strengthen both your charitable impact and your long-term wealth strategy.
At Bernath + Rosenberg, we help clients evaluate:
- Which assets are most tax-efficient to contribute
- When contributions should be made
- How charitable giving fits into estate planning
- How philanthropy aligns with multi-year tax strategies
If you’re considering a donor-advised fund or want to structure your giving more strategically in 2026, we welcome the opportunity to discuss your goals.
Call (212) 221-1140 or email tstricker@brwealth.com to schedule a consultation.
Frequently Asked Questions About Donor-Advised Funds
How do donor-advised funds improve tax efficiency in 2026?
Donor-advised funds allow donors to take a charitable deduction in the year of contribution while distributing funds later. In 2026, the 0.5% AGI floor makes strategic planning more important. Contributing appreciated assets may also help avoid capital gains taxes while maximizing charitable impact.
Are donor-advised funds appropriate for high-income earners?
They can be particularly useful in high-income years, such as after a business sale or large bonus. By contributing appreciated assets, donors may offset income while avoiding capital gains exposure.
How do donor-advised funds fit into estate planning?
DAFs can reduce the size of a taxable estate through lifetime giving and allow donors to name successor advisors, creating a structured philanthropic legacy aligned with family values.
About Ted
Ted Stricker is a partner and financial advisor at Bernath + Rosenberg, a full-service accounting, tax, and wealth management firm with offices in Monsey, NY, Lakewood, NJ, Cedarhurst, NY, and Miami Beach, FL. The firm demonstrates a personalized approach to custom-tailored solutions and an unwavering commitment to client service. With over 27 years of experience in the financial services industry, Ted manages the firm’s wealth management team, and specializes in designing financial plans for business owners and affluent families. Since joining the team in 2015, he provides practical and sound advice, combining independent approaches and solutions that reflect clients’ personality, lifestyle, and goals.
For the ninth year in a row, Bernath + Rosenberg has been named as one of the leading CPA firms in financial planning by Accounting Today, a publication that receives hundreds of submissions each year and features the Top 150 Firms in the nation. Ted is a CERTIFIED FINANCIAL PLANNER® practitioner and is a member of the Financial Planning Association. To learn more about Ted, connect with him on LinkedIn.
Professionals associated with Bernath & Rosenberg P.C. may be either (1) registered representatives with, and securities and advisory services offered through LPL Financial, Member FINRA/SIPC, a registered investment advisor; or (2) solely tax professionals of Bernath & Rosenberg P.C., and not affiliated with LPL Financial. Tax/accounting/CPA related services offered through Bernath & Rosenberg P.C. is a separate legal entity and not affiliated with LPL Financial. LPL Financial does not offer tax advice or Tax/accounting/CPA related services.
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.
Investing involves risk, including loss of principal. No strategy assures success or protects against loss.
This information is not intended to be a substitute for individualized tax advice. We suggest that you discuss your specific tax situation with a qualified tax advisor.
This is a hypothetical example and is not representative of any specific situation. Your results will vary.
